Bob Conrad sees traditional residential pumping as the steady, dependable work that brings new and diverse profit centers to his Arlington, Tenn.-based Mid South Septic Service.
Lifting lids and pumping septic tanks was the bread and butter work for Mid South when Conrad, a civil engineer by training, bought the well-established suburban Memphis company in 2004. But he sees diversification into sewer line inspection, cleaning and repair as the revenue drivers of the future.
A LITTLE BIT OF EVERYTHING
“I tried to focus on areas where I felt the higher margins were. Pumping septic tanks themselves (has not been) a real profitable business,” he says of the residential work in his territory. “A lot of pumpers might argue with that. I see it as a way to keep our foot in the door, to get those big trucks out there.
“They had what I felt was a pretty good model. They really focused on septic systems, and they had been doing grease traps and industrial pumping also,” he says of the original owners who ran the company for more than 20 years.
Along with that traditional base, Conrad has developed what he calls a full-service sewer company. About 50 percent of the work is commercial and residential septic tank and grease trap pumping, jetter and cable-machine work. Mid South pumps 20 to 30 residences a month. “It helps pay the bills. We’ve got a lot of fixed costs in terms of overhead,” he says.
When technicians aren’t pumping, they’re repairing and installing septic systems, performing pipeline camera inspections and cleaning projects, and repairing sewer lines. Conrad has found these jobs to be more profitable, if not more consistent. And that’s where septic service beautifully balances the business.
“It’s really a utilization game. You have to have these good employees available, but what do they do in the meantime?” he says. “It’s a good use of their time.”
Conrad says there is enough flexibility in schedules to move workers around. He knows which customers will be flexible and which will not. Also, grease trap jobs and other scheduled maintenance often can be adjusted to accommodate unexpected work.
Mid South has significant commercial and industrial business, including several large manufacturing plants and Shelby County prisons. Customers include Smuckers, Rich’s Foods, Coca-Cola and Pepsi. Mid South also works for local municipalities, pumping lift stations and lining sewer lines, and it cleans grease traps for many local restaurants, including Cracker Barrel, Taco Bell and more than 15 Captain D’s.
INSTALLING SYSTEMS
Conrad says Mid South installs 60 to 100 septic systems in a good year, which 2008 was not. They installed about 20 systems and repaired maybe 20 more. He misses the installing because, again, the margins are higher.
“When we can put in septic systems, that’s good work for us,” he says. “Until the housing market improves, we are focusing on building up our service work and less on the installation of new septic systems.”
Most sales come from referrals, which led them to decide this year to cancel their Yellow Pages display advertisement.
“Almost every call we get is from referrals or repeat calls,” Conrad says. He says the money saved from dropping phone book advertising can be spent on another salesman or for mailings and additional literature targeted at potential commercial and industrial customers.
“If we lose anything from the Yellow Pages, we’ll lose a person that just doesn’t know who to call to pump their septic tank. We have to pump quite a few septic tanks to pay for those ads,” he says.
Also, he says, the previous owners developed a good Web site, and they’ve had many customers tell them that’s how they found out about Mid South. “That’s another factor to this Yellow Pages decision,” he says.
Their service area is Shelby County, home to Memphis and its suburbs, and the fast-growing northern DeSoto County in Mississippi. Conrad will take jobs beyond that territory, but often loses that work to more localized pumpers who have lower overhead and offer lower rates.
“We’ve got a full-service sewer company. We have foremen that are on call 24 hours a day. We have an office you can come visit and look at plans,” he says of higher costs that he has to cover.
REPAIRING SEWER LINES
Conrad added a Nu Flow sewer line repair franchise in 2007, and his niche is re-lining shorter lengths of pipe. Larger companies do the big jobs, but often call on him for point repairs or service laterals. Mid South also pitches in with camera work and cleaning, services that, when combined, offer desirable profit margins.
“If you were just doing cameras or just doing cleaning, it would be hard to do well. You need a full underground sewer package,” he says. To get the jobs done, they have large and small Aries Industries cameras for sewer line inspection, and large jetters.
Conrad says sewer line repair and camera work, as well as industrial tank and grease trap pumping, are especially welcome work in the winter, when septic system installation is difficult. Western Tennessee and northern Mississippi aren’t subject to the deep frost and ample snow cover of the north, but the winter weather isn’t ideal for a lot of excavation work that helps business the rest of the year.
“We’ll be pumping and we’ll do maintenance and we’ll do everything we can do to get through the winter. Winters have been a difficult time for us,” he says.
Mid South’s fleet of vehicles is built for diversification, including a 1999 GMC Kodiak service truck with 2,500-gallon tank and 2001 Sterling with 3,300-gallon tank. It also has a 1985 Vactor Manufacturing Inc. vacuum loader, a Caterpillar Inc. backhoe, a Kobelco excavator and a 2004 Ford F-650 dump truck.
The Vactor was used recently to clean up 7,000 pounds of spilled cat litter in a rail yard. Conrad says they kept the cat litter and use it to soak up oil in their shop.
Normally the Vactor is used to clean sewer lines and accompanies a sewer line camera on jobs. Conrad says the equipment is idle about half the time, but makes good money when in use. He’s trying to secure more lining and cleaning jobs to keep it busy.
SAVVY STAFF
Mid South has 13 employees for the septic business and four more who do soil boring for utilities and contactors. The office staff consists of Conrad, an AutoCAD technician, office administrator Kelly Looney, general manager Joey Wimberley and general foreman Cary Allison.
Their single headquarters building includes a 6,800-square-foot shop where a few mechanically inclined employees do routine maintenance. In addition, Conrad has two mechanics he can call in after hours for the more extensive work, such as engine rebuilds.
With employee retention in mind, Conrad says he pays competitive wages. The company pays 75 percent of health in-surance premiums and offers paid holidays and earned days off. It has a savings incentive match plan, also known as a SIMPLE IRA, for which Mid South matches 3 percent of employee contributions. Keeping good employees is critical because it’s tough to find workers with necessary driving and operator skills off the street.
“In our business, we can’t just put an ad in the paper and find a guy who knows how to drive a pump truck and operate jetters,” Conrad says. “We want to be able to pay an employee enough to raise a family and live a decent life.”
